Bitcoin funding rate flips negative after $48K retest — Was it a bear trap?
Cointelegraph
Published Apr 23, 2021 06:45PM ET
Updated Apr 24, 2021 07:00AM ET
As Bitcoin (BTC) lost the $52,000 support on April 22, the futures contracts funding rate entered negative terrain. This uncommon situation causes the shorts, investors betting on price downside, to pay fees every eight hours.
While the rate itself is mildly damaging, this situation creates incentives for arbitrage desks and market makers to buy perpetual contracts (inverse swaps) while simultaneously selling the future monthly contracts. The cheaper it is for long-term leverage, the higher the incentives for bulls to open positions, creating a perfect "bear trap."
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Written By: Cointelegraph
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